Facilitating Smallholder Farmers’ Market Access
In the OIC Member Countries
52
Access to finance
Uganda ranks significantly above other low-income countries in access to credit, scoring
well compared to its peers and also in absolute terms, ranking 42 out of 189 countries.
Traditional banks tend to concentrate in urban areas, where they can help businesses all
along the value chain. They are less useful to businesses and farmers in rural areas, where
credit flows tend to depend on informal channels or government programs.96 The last 10
years have seen a rapid expansion of savings and credit cooperatives (SACCOs),97
however. SACCOs focus on microcredit and small depositors, often with the backing of
NGOs. Participants are relatively poor and unlikely to have other ways to access credit.
Uganda has also implemented a warehouse receipt system to facilitate commodity trade,
initially in coffee. Following a set of reforms begun in 1990, Uganda opened its coffee
exports to competition. Although the state Coffee Marketing Board remained in place, a
large share of the coffee trade shifted to private firms, often financed off-shore. To help
local exporters compete, legislators passed a Ugandan Warehouse Receipt Act, which
facilitates lending against inventories held in a registered warehouse.98
Food safety and quality
As more food is delivered to an expanding urban population through grocery stores and
fast food restaurants, private businesses will increasingly seek to promote the safety of the
food they provide and protect their reputations from the fallout from outbreaks of food-
borne illness. The proliferation of these new types of food suppliers will make it desirable
and feasible to develop an inspection system to enforce government-legislated food safety
standards. To date, however, most communities in Uganda lack formal grocery stores
(compared, for example, to Latin America, where most communities have them).99
Although the limited presence of formal grocery stores and other private food delivery
enterprises means that Uganda lacks an active private mechanism to ensure food safety
for domestic consumers, food exporters must nonetheless meet standards in the markets
they serve, and their actions often prompt governments to take swift action on food safety.
In the case of Uganda, the need for food safety controls was highlighted when the EU
imposed three consecutive import bans on fish from Lake Victoria.100 Because food safety
controls were lacking, the government and industry could not address importers’
concerns when a cholera outbreak in the area raised questions about the safety of fish
exported from Uganda. The crisis prompted the development and implementation of a
regulatory framework. Despite this action, the framework appears to fall short of best-
practice standards and places Uganda’s most lucrative markets at risk.101
96 As demonstrated by Mpuga (2010), using data from 1992 and 1999.
97 Mpiira et al. (2014).
98 Varangis and Larson (1996).
99 Economist Intelligence Unit (2014).
100 See the account in Bagumire et al. (2009).
101 See Bagumire et al. (2009).